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PROPERTY & CONSTRUCTION HANDBOOK 2011
DAVIS LANGDON, An AECOM Company AFRICA REGION PROPERTY AND CONSTRUCTION HANDBOOK 2011 24th EDITION © 2011 ISBN 978-0-620-50418-8 Published by Davis Langdon as a service to the property and construction industry. All rights reserved. No part of this publication may be reproduced, copied, stored or transmitted in any form without prior written permission from Davis Langdon. The information contained herein should be regarded as indicative and for general guidance only. Davis Langdon makes no representation, expressed or implied, with regard to the accuracy of the information herein and cannot accept any responsibility or liability for any errors or omissions that may be made.
FOUNDING MEMBER : CATEGORY SILVER
DAVIS LANGDON, AN AECOM COMPANY Established 1922 www.davislangdon.com www.aecom.com
vision and core values Message from the managing director Program. health and environmental management Sustainability Research support Quantity surveying/Cost management Engineering cost management Building services cost management Project management Specification consultancy Inclusive rate estimates Inherent difficulties and pitfalls Specification Wall to floor ratio – plan shape Floor to ceiling heights Plumbing. Consultancy BBBEE statement Delivering to the highest standards Safety. mechanical and electrical installations Construction areas Internal subdivisions Parking Approximate inclusive building cost rates Regional variations Building rates Building services International costs Cost comparisons Africa building cost comparison International building cost comparison International office rental comparison 01 5 8 10 13 15 16 17 18 19 20 24 26 27 29 34 35 36 37 37 38 38 38 42 43 48 51 52 53 54 04 | 2 03 02 . Cost. An AECOM Company Purpose. An AECOM Company Davis Langdon.Davis Langdon.
Building cost Building cost Escalation rate Calculation of estimated escalation Tender price escalation Cost indices Tender climate Unique large scale projects Value added tax Graphs: BER and JBCC CPAP January to January % change January indices Tender market indicator Method for measuring rentable areas SAPOA methods The basis Area definitions General definitions Retail, industrial, residential and other Generally Return on investment Criteria to be employed Initial return Cash flow analysis Residual land value The formula Example Africa in figures Area and population Graph: Population 2008 Gross domestic product 2008 Graph: Gross domestic product 2008 Directory of offices
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| SECTION ONE DAVIS LANGDON, AN AECOM COMPANY
In 2010, Davis Langdon joined AECOM, a leading provider of professional technical and management support services for government and commercial clients around the world.
AECOM is a global provider of professional technical and management support services to a broad range of markets, including transportation, facilities, environmental, energy, water and government. With approximately 45,000 employees around the world, AECOM is a leader in all of the key markets that it serves. AECOM provides a blend of global reach, local knowledge, innovation and technical excellence in delivering solutions that create, enhance and sustain the world’s built, natural and social environments. A Fortune 500 company, AECOM serves clients in approximately 125 countries and has annual revenue in excess of $7.0 billion. More information on AECOM and its services can be found at www.aecom.com. Since AECOM was launched as an independent company in 1990, the firm has grown and diversified through corporate expansion and acquisition activities that have significantly broadened the company’s business lines and geographic reach. In partnership with AECOM, Davis Langdon is positioned to deliver consultancy services as part of a complete end–to–end offer, while Davis Langdon’s strong cost and project management capabilities bolster AECOM’s growing portfolio of construction management services.
Germany. Ireland. Perth. Sydney and Townsville Middle East Bahrain. Mozambique. Canberra. Darwin. Honolulu. D.Global presence Davis Langdon is a global business line within the AECOM organisation. Santa Monica. New York.000 people in over 75 offices worldwide. We have offices in the following regions: Africa Botswana. United Arab Emirates and Egypt (North Africa) UK & Europe England. This year we are celebrating nearly 90 years of adding value to construction projects on the African continent. Davis Langdon can support long–term business needs from both a local and global perspective. Nigeria and South Africa Australia & New Zealand Adelaide. | 6 . San Francisco. With over 3. Melbourne. Qatar. France. Auckland. Long history in Africa Our long history in South Africa is a commitment and legacy we are very proud of.C. Christchurch. Cairns. Philadelphia. Sacramento. Saudi Arabia. Lebanon. Brisbane. Italy and Scotland USA Boston. Seattle and Washington. Hobart. Holland.
S. 2007. 2001. 2006. 7| . 2006. as evidenced by the following prestigious industry awards: – 2011 PMR Diamond Arrow Award for Best Large Quantity Surveying practice in South Africa – Davis Langdon Building ‘Project/Construction Manager of the Year’ 2004 – World Architecture ‘Top International Cost Consultant’ 2010 — 17 years in succession – Building ‘Consultant/Surveyor of the Year’ 1995. 2008 and 2009 – UK Times ‘100 Best Companies to Work For’ 2005. 2000.Industry awards The consistently high standard of professional service provided by both Davis Langdon and AECOM is recognised throughout the construction industry. 2007. 2008 & 2009 – AECOM Engineering News-Record AECOM is ranked No. 1996. 2003. 1 on the magazine’s list of the top 500 design firms – AECOM featured in Newsweek’s list of the Greenest Big Companies in the U.
To become an organisation that gets even closer to its clients. VISION To become an organisation that is respected and valued for Inspiring Solutions and Enduring Legacies. To become the organisation to whom our clients make the first call on the first day and who then stays with them. VISION AND CORE VALUES PURPOSE To create. and even more trusted by them. an AECOM company. sets the industry standard for client service. We keep our commitments and treat others with mutual respect and trust. | 8 . natural and social environments. by their side. enhance and sustain the world’s built. Employees We are a global team of some of the most talented professionals working on the world’s most challenging projects. We respect and encourage our employees’ ideas. throughout their journey. We are passionate about solving clients’ problems and exploring new opportunities with them. diversity and cultures. CORE VALUES Integrity We are honest and ethical in our actions.PURPOSE. Clients Davis Langdon.
9| . long–term projects. Innovation Creativity. equipment and the environment. We continually look for creative. Safety In addition to preventing injuries.Excellence In all areas of our business — technical. Agility We embrace change. We work to anticipate changes before they happen. property. We pride ourselves on bringing outstanding results to everything we do. new and better ways to apply our expertise to all dimensions of our work. operational and administrative — we strive to achieve excellence. A solid pipeline of well–funded. flexibility and adaptation in a rapidly evolving world. we continue to grow and prosper. exploration and imagination are key to our business approach. positions us well for continued profitable growth. coupled with ongoing cost–containment efforts and efficiencies in marketing through shared services. Profitable growth Through organic growth initiatives and strategic acquisitions. safety also means maintaining a healthy workplace and ensuring that we protect and preserve facilities. and help clients and employees adapt to those changes.
We are proud to be a company that continuously challenges itself while simultaneously building our vision on three strategic pillars: Thought Leadership. Creativity and Excellence without Compromise. a global provider of professional. Transportation. Commercial Property. Industrial.MESSAGE FROM THE MANAGING DIRECTOR Change is the law of life. technical and management support services. Sports and Culture. Our vision is to become an organisation that is respected and valued for Inspiring Solutions and Enduring Legacies. Kennedy. 2010 and 2011 have not been any different.aecom. and Infrastructure. Mining and Resources. You should have received communication in November 2010 on our merger with AECOM. Together with our vision and strategic pillars. accountability remains a constant factor. And those who look only to the past or present are certain to miss the future. Visit www.com to learn more about our growing business. Hotels. | 10 . 1963) Davis Langdon has change inherent in its DNA. We continue to reorganise our business around sectors and have appointed sector leads for the main sectors of Retail. innovation and collaboration remain the bedrock of our business. our core values of integrity. (John F. While change may be part of our DNA. Public.
Thought leadership in the areas of Knowledge. we are expanding our reach and local knowledge. with both local and multi– national clients. Research. Africa remains our passion and together with AECOM’s footprint in Africa. colleagues and people. Client and colleague satisfaction will be generated by our ability to harness the best talent and skills in Davis Langdon.Our sector–led business approach is constructed to deliver the best outcomes for our clients. 11 | . Africa remains our key focus for growth and business sustainability. to deliver on specific projects irrespective of geography. which provide both our people and our clients with confidence in the sustainability and safety of our business. Our Broad–Based Black Economic Empowerment (BBBEE) journey continues as we have set ourselves a target to continuously improve in all criteria in an effort to maintain and enhance our leading role amongst professionals in the built environment. We continue to develop opportunities through the continent in all sectors. We aim to entrench our role as trusted advisor in Africa and help clients navigate unchartered territory with integrity and respect. Innovation and Best Practice will be the derivatives of our sector approach. even in sectors which you may not traditionally have associated us with. Engage with us on sectors of interest to you. so we can demonstrate our capabilities. We continue with our corporate citizen responsibilities and have recently been successfully audited for certification by DEKRA for ISO 14001:2004 and BS OHSAS 18001:2007 international standards.
Whilst our business has evolved. we continue to offer services that make a measurable difference to the value. Indresen Pillay Managing Director | 12 . cost and time of our clients’ projects.
it is in the creative application of our knowledge and experience. infrastructure and buildings. ambition has pushed us to think harder about the context in which we give our advice. 13 | . our clients value the fact that our offer always contains a strategic component. Our ability to think big means we focus on the successful delivery of the project in hand. and therefore provide a technical solution. In many cases. COST. While our roots are in technical delivery. this is simply giving the client the ‘expected. The bigger picture If we were to analyse situations where our advice has been most effective. Our engagement with the bigger picture enables us to operate beyond project level and support long–term business strategies. Davis Langdon has always been a forward-thinking organisation and has developed a wide range of technical expertise around the development of land. It is this approach which makes us the leading construction consultancy we are today.’ but such advice can have limited value. Consultancy business line. Cost. CONSULTANCY Forming the backbone of AECOM’s Program. More recently. whilst also appreciating our clients’ goals and objectives from a broader perspective.PROGRAM. We believe there are too many consultants who view a problem as a technical issue.
Cohesive solutions We can support the challenges and opportunities our clients face throughout the life cycle of a development.Sector specialists We structure ourselves around our clients’ sectors to maintain a detailed understanding of the dynamics influencing their different markets. | 14 . Our ability to offer specialists and not generalists adds real value and sets us apart from our competitors. clients have access to individuals who are experts in their specific field. Simply put. from business and investment strategy at the organisational level right through to operational efficiency of the final built product.
BBBEE STATEMENT Davis Langdon. We have been independently evaluated and certified in terms of the Act for the Construction Sector Charter issued in terms of section 9(1) of the BBBEE Act 53 of 2003 gazetted on 4 May 2009 and the results are as follows: Score: 67. viz: – Ownership – Management control – Employment equity – Skills development – Preferential procurement – Enterprise development – Socio–economic development. 15 | . Davis Langdon has set itself a continuing improvement target in all the above criteria in order to maintain and increase our leading role amongst professionals in the built environment. is fully committed to embrace the principles of the Broad–Based Black Economic Empowerment Bill No 53 of 2003.45 Level: Level 4 contributor Procurement recognition level: 100% Value-added supplier: Yes The above scores have been achieved by quantifying all the components of BBBEE. an AECOM company (hereafter referred to as Davis Langdon). Notwithstanding the above achievements.
The way in which information is shared has changed dramatically. including ISO 9001:2008 accreditation. relevant to the markets in which we work. | 16 . but also about equipping them with the best tools.DELIVERING TO THE HIGHEST STANDARDS Delivering well is not only about employing the best people. Our quality management systems provide for a cycle of corrective and preventative action. and we are able to offer our clients both traditional and more innovative solutions for team collaboration on projects. to create positive opportunity for continuous improvement. We participate in the best schemes for independently managing the quality of our services.
where such commitment is compatible with the scope of our commission. to ensure a positive “green” culture we have formulated an environmental management policy to monitor. and wherever possible. which assures that we have successfully implemented an environmental and safety management system in accordance with the standard. Additionally. It is anticipated that the procedures arising from these additional certifications will form part of our firm’s integrated management system. This is done by way of a policy of continuous improvement. Davis Langdon is committed to positively contribute to the efforts of our clients in developing their projects in such a way as to minimise their environmental impact. Furthermore. wherein each executive and each employee feels responsible for the resources they use and the activities they undertake on behalf of the firm.SAFETY. To this end we have already become a “silver” founding member of the Green Building Council of South Africa. This was done because we support the ethos of an operationally safe office environment and remain committed to ensure a healthy and safe environment for our staff and colleagues. control and reduce the impact of our activities on the environment. HEALTH AND ENVIRONMENTAL MANAGEMENT Davis Langdon has been successfully audited for certification by DEKRA for the ISO 14001:2004 and BS OHSAS 18001:2007 international standards. 17 | .
which is active in research and development of sustainable solutions for developments. we also assisted the GBCSA on their technical working groups to launch the Green Star SA Office rating tool in 2008 and the Green Star SA Retail Centre rating tool in 2010. As a silver founding member. Staff from all geographic regions in South Africa have completed the Green Star SA accredited professional course and are available to assist clients and colleagues to also achieve their social responsibilities in addition to their financial or other objectives. We have hosted many seminars and published numerous scientific articles on sustainability. In SA. In our role. | 18 . Davis Langdon formed an international sustainability group. we produce the ‘Quick Guide to Emerging Green Design Attributes’. Davis Langdon was instrumental in the establishment of The Green Building Council of South Africa (GBCSA) in 2007. The expertise of our international partners is extensive and of great value to us as sustainable practices elsewhere have advanced and progressed by large measures in recent years.SUSTAINABILITY In recognising our social responsibility.
Davis Langdon consequently decided. the following: – Cost – Planning. Thirdly. to contribute to relevant research in a dedicated and rigorous way. there is a shortage of ‘in–depth’ research in the built environment. amongst others. design and development – Collaboration with universities. for the benefit of our clients and colleagues and to conform to international standards. professional bodies. Research is firstly conducted to support our knowledge database and existing activities to deliver the highest quality and relevant services. contract research is undertaken on assignment for clients in order to resolve industry specific problems. government and research institutions – Sustainability – Continuing educational workshops – Industry reports and brochures – Collaboration with our international offices with specific reference to the following: – Retail – Public – Commercial property – Residential – Hotels. 19 | . large and complex buildings.RESEARCH SUPPORT Generally. it serves the purpose to enhance our competitive edge in order to also deliver cost–effective services. Secondly. sports and culture – Transport – Industrial – Mining and resources – Infrastructure – Tall. regionally and internationally include. Research activities nationally.
Tariff of Professional Fees.QUANTITY SURVEYING/COST MANAGEMENT Davis Langdon provides comprehensive cost management services from project initiation to completion through all six stages of the project cycle identified by The South African Council for the Quantity Surveying Profession. Quantity Surveying Profession Act 2000 (Act 49 of 2000) as follows: Stage 1 – Assisting in developing a clear project brief – Attending project initiation meetings – Advising on the procurement policy for the project – Advising on other professional consultants and services required – Defining the quantity surveyor’s scope of work and services – Concluding the terms of the client/quantity surveyor professional services agreement with the client – Advising on economic factors affecting the project – Advising on appropriate financial design criteria – Providing necessary information within the agreed scope of the project to the other professional consultants – Providing services for which the following deliverables are applicable: – Agreed scope of work – Agreed services – Signed client/quantity surveyor professional services agreement. Stage 2 – Acquiring approval of the documentation programme from the principal consultant and other professional consultants | 20 .
principal consultant and other professional consultants Providing services for which the following deliverables are applicable: – Preliminary estimates of construction cost – Elemental or equivalent estimates of construction cost – Space allocation audit for the project. Stage 3 – Reviewing the documentation programme with the principal consultant and other professional consultants – Attending design and consultants’ meetings – Reviewing and evaluating design and outline specifications.– – – – – – – – Attending design and consultants’ meetings Reviewing and evaluating design concepts and advising on viability in conjunction with the other professional consultants Receiving relevant data and cost estimates from the other professional consultants Preparing preliminary and elemental or equivalent estimates of construction cost Assisting the client in preparing a financial viability report Auditing space allocation against the initial brief Liaising. cooperating and providing necessary information to the client. as well as exercising cost control in conjunction with the other professional consultants – Receiving relevant data and cost estimates from the other professional consultants – Preparing detailed estimates of construction cost – Assisting the client in reviewing the financial viability report – Commenting on space and accommodation allowances and preparing an area schedule 21 | .
technical and progress | 22 . cooperating and providing necessary information to the client.– – Liaising. subcontractors and suppliers – Reviewing working drawings for compliance with the approved budget of construction cost and/or financial viability – Preparing documentation for both principal and subcontract procurement – Assisting the principal consultant with calling of tenders and/or negotiation of prices – Assisting with financial evaluation of tenders – Assisting with preparation of contract documentation for signature – Providing services for which the following deliverables are applicable: – Budget of construction cost – Tender documentation – Financial evaluation of tenders – Priced contract documentation. Stage 5 – Attending the site handover – Preparing schedules of predicted cash flow – Preparing proactive estimates for proposed variations for client decision–making – Attending regular site. Stage 4 – Attending design and consultants’ meetings – Assisting the principal consultant in the formulation of the procurement strategy for contractors. principal consultant and other professional consultants Providing services for which the following deliverables are applicable: – Detailed estimates of construction cost – Area schedule.
23 | .– – – – – – meetings Adjudicating and resolving financial claims by the contractors Assisting in the resolution of contractual claims by the contractors Establishing and maintaining a financial control system Preparing valuations for payment certificates to be issued by the principal agent Preparing final accounts for the works on a progressive basis Providing services for which the following deliverables are applicable: – Schedules of predicted cash flow – Estimates for proposed variations – Financial control reports – Valuations for payment certificates – Progressive and draft final accounts. Stage 6 – Preparing valuations for payment certificates to be issued by the principal agent – Concluding final accounts – Providing services for which the following deliverables are applicable: – Valuations for payment certificates – Final accounts.
cost managers. Engineering Cost Management employs professional qualified quantity surveyors. metallurgical and petro–chemical projects are generally of a high monetary value. mining. Infrastructure. construction programmers and building surveyors. our Engineering Cost Management team operates throughout Africa using infrastructure support from other local Davis Langdon offices located in all major centres in South Africa and Botswana. and it is therefore most beneficial to involve Engineering Cost Management at an early stage in the project cycle.ENGINEERING COST MANAGEMENT Engineering cost management operates as a specialist service within Davis Langdon and comprises specialist skills and applications that enhance the risk and value management techniques required by the infrastructure. procurement. accountability and evidence of corporate governance. cost engineers. minerals. contract administrators. cost management and contract administration activities relative to the abovementioned industries. metallurgical and petrochemical sectors of industry. mining. This includes the constitution of dedicated independent teams specialising in and responsible for the estimating. Engineering Cost Management is responsible for many diverse projects within these industries with principle benefits to our clients being independence. With offices located in Johannesburg and Klerksdorp. This allows for strong financial discipline to be imposed on the project to ensure accurate and | 24 . minerals.
The implementation of these principles of financial management will deliver maximum shareholder value and it is in this area that Engineering Cost Management strives to significantly influence project outcomes to benefit all stakeholders.structured estimating. This is critical. which will contribute to and complement the client’s team. timeous and cost–effective procurement. as well as recognise and define cost is established. including the cost management of design changes and the timeous close–out of contracts. expertise and independence. particularly in the early stages of a project when the opportunity to add value. accurate and up–to–date maintenance of costs to completion. Davis Langdon Engineering Cost Management provides a depth of experience. the formalisation of project principles is equally critical throughout the project with cost management continuing through to the post–contract period and final closeout. 25 | . Simultaneously.
our Building Services team provides a comprehensive service including cost advice and quantity surveying services encompassing the following: – – – – – – – Cost planning Contract procurement Tender and contract documentation Cost control Risk management Value management Life cycle and whole life costing. escalators. draws upon its unique expertise to provide financial management and contract administration of building services.BUILDING SERVICES COST MANAGEMENT Davis Langdon Building Services. Electrical and Fire Protection Consultants. another specialist service within Davis Langdon. including the following: – – – – – – – – – – – Electrical installation HVAC installations Fire protection systems Fire detection and evacuation systems Access control CCTV Lifts. Working in close conjunction with the appointed Mechanical. travelators Communication systems Building management systems Security systems Data systems. | 26 .
This equips our Project Management team with the in–house skills and market expertise to recognise potential and define objectives from the outset. national and international basis that is focused on the vision for the project in question. we draw on the inherent commercial strength of the practice whilst also delivering a creative and people–based service. whilst also ensuring the delivery of value and appropriate management of risk throughout the project cycle. Recognised as one of the world’s leading providers of management and consultancy services. Our services can be tailored to suit the needs of the project and client and include: – Project management – Client’s representative – Principal agency – Value and risk management 27 | . organise and control the management of projects and programmes. from inception to completion. Our strength lies in an ability to provide a dedicated service on a local. we employ highly skilled professional project managers from a broad range of professional disciplines — offering experience across a wide range of sectors. lead.PROJECT MANAGEMENT Davis Langdon Project Management provides that vital independent and professional service to plan. Through our whole business approach to managing projects.
on time and within budget on a consistent basis. including advising on the various methods of selection. | 28 .– – – – – Programming. contractors and suppliers. Our project managers work together with our clients to manage the appointments of the necessary consultants. planning and control Project monitoring Project consultancy Development management Due diligence reporting. The growth of the service in recent years has been built upon strong alliances with long–standing clients and our ability to deliver wherever and whenever required. In addition. the negotiation and agreement of their services and fees. enthusiasm and drive to deliver the required results. to a prescribed quality. and strive to engender healthy and vibrant working relationships throughout the life cycle of the project. we will provide a single point of contact for the client when dealing with other third parties. We are committed to building and managing teams with a common culture of delivering excellence. personnel. Davis Langdon Project Management will invariably work with teams that are carefully pre–qualified and selected for their expertise.
We also tailor the specifications to suit the needs of: – Design teams – Developers – Retailers 29 | . experience and professionalism. research. facilitates local delivery of specifications. In developing the specifications. we are able to draw upon our global knowledge. Our service has been prepared for use by employers. We compile project specific specifications to reflect: – The design – The form of contract – The procurement process – Programme requirements – National standards and regulatory standards. which provides a means of accurate communication between client. based in Johannesburg.SPECIFICATION CONSULTANCY As the world’s leading specification consultancy firm. Our project–specific specifications mitigate against contractual risks and reduce areas of conflict. architects and engineers. Through these specifications we aim to add value. in particular ‘Africa Spec™’. designer and those carrying out the construction. ensure quality and reduce the risks to the project participants. An experienced team. Davis Langdon Schumann Smith is well established in South Africa.
experience and professionalism. As specification consultants. research. Through them we aim to add value. Our specifications are tailored to suit the needs of the parties involved in the design and/or construction process. and the responsibilities of the contractor under the terms of the contract. A comprehensive specification reduces the contractual risk of all parties.– – – – – Government bodies Universities Private practices Manufacturers Other parties involved in the design and/or construction process. attending design review meetings and producing appropriate project specifications that will: – Maintain the architect’s and/or designer’s intent – Set accurate technical criteria – Set achievable performance criteria – Allow specialist contractors to provide a design response | 30 . Specifications must reflect both the designer’s responsibility as set out in his appointment. We underwrite our specifications by the guarantees of knowledge. ensure quality and reduce the risk on projects. avoids post–contract disputes and ensures that everyone is aware of what is being bought before committing to a contract. our role is to: – Support the design team – Prepare appropriate documentation – Assist in the procurement process We operate as a proactive member of the design team.
This electronic expert resource is available on a subscription basis and allows access to over 1. Together with our joint venture partners. we have brought to South Africa a specification software package. which has been tried and tested overseas for almost thirty years. As another development of our service line. searchable database of South African national standards and resources for the construction industry.000 construction–related South African national standards including SANS10400. Klassidex and Davis Langdon Schumann Smith. National Specification (Pty) Ltd (NBS) is a joint venture between RIBA Enterprises. NBS Construction Knowledge (a joint venture between National Specifications and the South African Bureau of Standards) is an internet–based. These standards are constantly updated and increase in number as new standards are published or revised. The NBS Building SA technical team have written the content with the most up–to–date technical information available and this content. will be expanded and updated regularly. structural and engineering will follow. Close collaboration with 31 | . together with its associated guidance clauses. The content is delivered on tried and tested software and specifications are edited on screen. we have recently introduced the concept of ‘design team management’ to South Africa.– – Reflect the contractual requirements Form the basis for checking compliance. Other modules covering civil. NBS Building SA is a library of pre–written specification clauses with guidance for each clause appearing alongside for speedy referral.
technical and organisational knowledge. Managing design teams allows us to add value because we understand the design process.design teams has led to the evolution of our design team management service. This service is based on our contractual. the purpose of which is to facilitate the design process by managing issues that impinge on it. We also understand the interface between design and construction. and add knowledge of advanced construction techniques. new procurement routes and industrial technology to the design team. deployed to support the working methods of design firms and to protect their interests. | 32 .
02 | SECTION TWO INCLUSIVE RATE ESTIMATES 33 | .
This rate when compared with the rate for a 200m² house containing plumbing.This section highlights the inherent difficulties and pitfalls that may be experienced when inclusive or single rates are used to establish the estimated cost of a particular building. carpets. rate per meters squared (m²) of construction area or rate per unit in number. one door and a simple roof construction may cost R6. For example.e. It certainly is both quick and convenient. This rate/m² is then used as the sole yardstick of what the building costs. The most widely used method of quick approximate estimating to obtain an indication of the construction cost of a building is by the rate/m²–on–plan method. at R4. Very often the cost of a building is expressed in R/m² and the unit cost is ignored.700/m² would | 34 . It is often also referred to as the ‘order of magnitude’ method of cost estimation. Comparisons of the costs of various buildings are often made by comparing the individual rates/m² without due consideration being given to a number of factors that can affect the rate/m² to a substantial degree. however.000/m². decisions are often based on inclusive rate estimates. i. etc. Construction cost estimation is complex. Comprehensive exercises based on detailed and accurate information are required to achieve reliable levels of comfort. For various reasons. if calculated at all. but it can be very misleading if used indiscriminately without care being taken in the calculation of the construction area and the selection of the rate. a security guard’s shelter measuring 2m x 2m consisting of brick walls with windows.
expensive carpets in lieu of vinyl floor tiles can increase the rate by R100/m².000 for the house. the unit cost of the shelter is R24. 35 | . Yet. The following are a few of the important criteria to be taken into account when rates/m² are considered: SPECIFICATION Two buildings having identical shape and accommodation can have vastly different R/m² rates should the one building have finishes of a differing standard from the other. in fact.seem to be very expensive. For example.000 compared with R940.
600m² 232m 3m 696m² 696/1.600 30.600m² 160m 3m 480m² 480/1.0% 100m 16m Area Wall length Wall height Wall area Wall floor ratio Cost of external facade in terms of R/m² of floor area to each R/m² of facade area 1. e.WALL TO FLOOR RATIO — PLAN SHAPE The most economical shape of a building is a square.g.5% | 36 . This shape requires the minimum wall length to enclose a given floor area.600 43. Case A 40m 40m Area Wall length Wall height Wall area Wall floor ratio Cost of external facade in terms of R/m² of floor area to each R/m² of facade area Case B 1.
The rate/m² on plan of a facade costing R600/m² on elevation in each case is: Case A Case B R600 x 30.0% = R180/m² R600 x 43.5% = R261/m²
The reader with a good knowledge of mathematics will correctly fault the above argument by promoting a circle as being the geometric shape that requires the minimum wall length to enclose a given floor area. In very few cases, however, this is the most economical plan shape of a building, as for various reasons the cost of constructing a circular as opposed to a straight external envelope is generally greater than the saving in quantity of the envelope. As the length of the perimeter of a circle is 11.4% less than that of a square enclosing the same area, the unit cost of the circular envelope should not exceed the unit cost of the straight envelope by more than 12.8% for the circle to be the most economical plan shape.
FLOOR TO CEILING HEIGHTS
Two buildings of identical plan shape and area but of different floor to ceiling heights will have different rates/m² due to the additional cost of walling, finishes, etc. in the building with the higher floor to ceiling height.
PLUMBING, MECHANICAL & ELECTRICAL INSTALLATIONS
The concentration of plumbing installations has a marked effect on the rate/m² of the building. The cost of a toilet block per m² is much greater than that of a house containing one bathroom because the high cost of the bathroom area is spread over the less expensive areas of the remainder of the house. 37 |
Similarly, in office blocks, factories, etc., the rate/m² will depend greatly on whether air–conditioning, security systems, sprinklers, smoke detection systems, specialised electrical installations, acoustic treatment or other specialised installations are incorporated into the design.
The rate/m² for a building having large balconies or access corridors that have been included in the construction area cannot be compared with the rate/m² for a building not having similar areas of low cost.
The rate/m² for open plan offices should not be compared directly with the rate/m² for offices having internal partitions without the relevant adjustments being made. The inclusion of partitions can increase the overall rate/m² by up to R230/m² of office area.
Should the building in question contain certain areas for parking within the building area, the average rate/m² will be less than for a building having the identical accommodation but with parking outside the building structure. An example follows overleaf.
Case A Building having parking within the building area
OFFICES OFFICES OFFICES OFFICES PARKING (600m2)
Plan area 600m²/floor Construction area 3,000m²
Basement R 16,800,000 R 1,800,000 R 18,600,000 R 6,200
Cost of building Offices 2,400m² @ R7,000 = Parking 600m² @ R3,000 = Total Average rate/m² Case B
Building having parking outside the building structure and on grade
OFFICES OFFICES OFFICES OFFICES PARKING (600m2)
Plan area 600m²/floor Construction area 2,400m²
Cost of building Offices 2,400m² @ R7,000 = Parking 600m² @ R 300 = Total Average rate/m²
R 16,800,000 R 180,000 R 16,980,000 R 7,075
Under Case B the area of parking is not included as part of the ‘construction area’ for purposes of calculating the rate/m². concentration of joinery and other fittings. rates/m² must be used with circumspection and the degree of accuracy of the answers provided must be considered to be in direct proportion to the amount of research and surveys undertaken to establish the rate for the building in question. floor loadings. Amongst these are site works (peculiar to each specific contract). the rate/m² for supermarket/ hypermarket shopping centres should be qualified as to whether the cost of on–site parking and ancillary site development has been included. | 40 . overall height of building. number of storeys. There are numerous further points of consideration that should be taken into account in addition to those given above. column spans. which cost could be in the region of R500/m² of construction area. etc. open atrium upper volumes. Similarly. In conclusion.
03 | SECTION THREE APPROXIMATE INCLUSIVE BUILDING COST RATES 41 | .
REGIONAL VARIATIONS Construction costs normally vary between the different provinces of South Africa. It is emphasized that these rates are of indicative nature only and should be used circumspectly. Be mindful. and therefore represent the average expected building cost rates for 2011. where possible. Rates are based on 1 July 2011. Costs in parts of the Western Cape and KwaZulu–Natal. First Edition (effective from 1 August 2005). are generally significantly higher than Gauteng due to the demand for this accommodation. specifically upper class residential. as they are dependent upon a number of assumptions. | 42 . Rates have therefore been based on data received from the Gauteng province. as defined in the ‘Method for Measuring Floor Areas in Buildings. for example.’ where appropriate. that cost differences between provinces at a given point in time are not constant and may vary over time periods due to differences in supply and demand or other factors. however. See ‘Inclusive rate estimates’ herein. The area of the building expressed in m² is equivalent to the ‘construction area. Specific costs for any region can be given upon request by any Davis Langdon office in that region. published by the South African Property Owners Association (SAPOA).This section provides a list of approximate inclusive building cost rates for various building types in South Africa.
. wallpaper. electrical. partitions.300 R 10.500 Note: Office rates exclude parking and include appropriate tenant allowances incorporating carpets.BUILDING RATES Rates include the cost of appropriate building services.000 – – – – R 6. etc. e.800 R 2.600 R 3. Offices Rate per m² (excl. lighting.400 R 10.200 Low rise prestigious office park development High rise tower block with standard specification High rise prestigious tower block R 6.000 R 12.g.800 R 3. Parking Parking on grade including integral landscaping Structured parking Parking in semi–basement Parking in basement R 350 – – – – R 450 R 2. loss of interest. louvre drapes. air–conditioning. air–conditioning and electrical reticulation.000 R 3. VAT) Low rise office park development with standard specification R 5.800 R 4. parking. but exclude costs of site infrastructure development. any future escalation. professional fees and VAT.000 R 10.700 R 7.500 43 | .
Retail rates include the cost of tenant requirements and specifications of national chain stores.500 – R 6.000 – R 5.000 R 7.800 R 4. steel cladding above and roof sheeting R 3. neighbourhood and community centres are generally outward trading with no internal malls.500 R 7. Retail costs vary considerably depending on the tenant mix and sizing of the various stores.000 R 7.000 – R 5.500 R 9. VAT) R 5.500 – – Steel frame. Industrial Industrial warehouse including office and change facilities within structure area (architect/engineer–designed): – Steel frame. steel cladding and roof sheeting R 2.500 R 8.000 – – R 6.500 Note: Super regional centres and regional centres are generally inward trading with internal malls.000 – R 7.200 | 44 . brickwork to ceiling.000 R 8.Retail Local convenience centres (Not exceeding 5 000m²) Neighbourhood centres (5 000 – 12 000m²) Community centres (12 000 – 25 000m²) Minor regional centres (25 000 – 50 000m²) Regional centres (50 000 – 100 000m²) Super regional centres (Exceeding 100 000m²) Rate per m² (excl. whereas convenient.000 – R 3.
700 Residential Site services to low cost housing stand (250 – 350m²) Rate per no (excl.000 Rate per m² (excl.000 – R 2.400 3.000 – R R R R 1.800 R 11.200 – R 2.000 R 3. VAT) R 22.900 – R 6.000 – Rate per no (excl.700 – R 9.900 5.800 – R 8.600 R 5.000 – R 34.600 R 36. VAT) Carport (shaded) Carport (covered) – single – double – single – double R R R R 2.000 R 3. VAT) RDP housing Low cost housing Duplex townhouse – economic Prestige apartment block Private dwelling houses: – economic – standard – middle class – luxury – exclusive – exceptional (‘super luxury’) Outbuildings R 1.400 R 4.700 – R 4. VAT) – – Administration offices.000 R 12.200 6.600 6.300 45 | .700 Simple low rise apartment block R 4.Rate per m² (excl.400 R18. ablution and change room block Cold storage facilities R 4.000 – R 14.600 4.500 8.500 R 7.
Studios Studios – dancing.000 – R 900.Rate per no (excl. fittings and equipment (FF&E).650. etc Conference centres Conference centre to international standards Rate per m² (excl. art exhibitions.000/bed R 1.000/key 1.700 R 16.430.760.000 R 590.420.000 – R – R – R 715.000 – R 21.000 | 46 . VAT) R 8.000/key R 60.000 Note: Hotel rates exclude allowances for furniture.000 R 215. VAT) Swimming pool – Not exceeding 50 kl – Exceeding 50 kl and not exceeding 100 kl Tennis court – Standard – Floodlit Clinics Clinic – 150–bed.000 R60.000 R 1.000/key 2.000 – R 100.900 – R 12. 5 theatre (excluding consulting rooms) Hotels 3–Star Budget 5–Star Luxury Resort style R 495.000 R 280.
000 50.000 –R –R –R 34.400 R 5.500 R 7.800 – R 5. VAT) R R 22.000 – R 400.500 R 8.500 – R 4.000/inmate – R 800.300 R 7.000 Rate per m² (excl.000/seat 17.000 600.100 R 10.700 R 6.000 000 R 14.500 R 4.300 Rate per no (excl.000.000/seat 67.000/inmate 47 | .500 R 8.Retirement centres Dwelling houses – Middle class – Luxury Apartment block – Middle class – Luxury Community centre – Middle class – Luxury Frail care Schools Primary school Secondary school Stadiums Stadium to PSL standards Stadium to FIFA standards Stadium pitch to FIFA standards Prisons 1 000 Inmate prison R 500 Inmate prison R High/maximum security prison R 380.000/inmate – R 450.000 400. VAT) R 5.
extent and type of glazing. fire detection. substations. CCTV. the design. standby generators to office buildings Residential Shopping centres Hotels Hospitals Electronic installation Offices – Standard installation – Sophisticated installation Residential Shopping centres Hotels Hospitals R R R R R R 350 450 190 420 375 380 – – – – – – R R R R R R 450 575 250 575 475 500 Rate per m² (excl. public address.050 Note: Electronic installation includes access control. shading. can vary appreciably depending on the orientation. CATV. and therefore the cost of air– conditioning. data installation. PABX and BMS. | 48 . Electrical installation Offices – Standard installation – Sophisticated installation – UPS. WiFi. Rates are dependent on various factors related to the design of the building and the requirements of the system. In particular.BUILDING SERVICES The following rates are for building services (mechanical and electrical) applicable to typical building types in the categories indicated. external wall and roof construction. etc. VAT) R 325 R 460 R R R R R 230 350 525 680 800 – – – – – – – R R 575 750 R 320 R 550 R 675 R 850 R 1.
000/key 40.200 R 750 R 1.350 Rate per no (excl.000 – R Note: For guidance with regard to the cost of buildings rated under the Green Star SA rating tool system.000/key 780.000/key 26.000 – R 36.000 R 210.200 R 775 R 1.400 R 1.com.500 – R 18.davislangdon.000 – R 67.550 R 1. 49 | . see the latest edition of the Davis Langdon publication entitled ‘Quick Guide to Emerging Green Design Attributes’ on our website www. VAT) Hotels – Console units – Split units – Central plant Hospitals – operating theatres (per theatre) R R R 12.Fire protection installation (offices) Sprinkler system including hydrants and hose reels (excluding void sprinklers) Air-conditioning installation Ventilation to parking/ service areas Offices – Console units – Console/split units – Package units – Central plant – Variable refrigerant flow (VRF) Residential — split units Shopping centres – Split units – Package units – Evaporative cooling Hotels — public areas Hospitals — split units to wards Rate per m² (excl. VAT) R 140 – R 230 R R R R R R R 150 450 520 725 950 950 675 – – – – – – – – – – – – R 300 R 600 R 675 R 900 R 1.550 R 625 R 675 R 310 R 950 R 1.650 R 1.
| 50 04 | SECTION FOUR INTERNATIONAL COSTS .
etc. loss of interest. 51 | . parking. any future escalation. in particular.g. Their assistance in this regard is acknowledged with thanks. these costs must be used circumspectly. These rates are of indicative nature and therefore. do vary from country to country. electrical. The following table (Africa building cost comparison) (see page 52). professional fees and VAT. These standards. These are estimated costs only and should.. e. It should be noted that these rates are based on the second quarter of 2010 and can therefore not be compared with other rates contained in this publication. air–conditioning. the qualifications dealt with elsewhere in this publication would apply. Rates are based on 1 July 2011 and therefore represent the average expected building cost rates for 2011. This being the case. be considered in the context of acceptable building standards in each relevant country. Rates include the cost of appropriate building services. The cost data under the heading ‘International building cost rate comparison’ (see page 53) was made available by Davis Langdon Australasia. international building costs and international rental rates.This section makes provision for comparisons of Africa building costs. both at a technical level and pertaining to quality. presents in summarised form the approximate estimated building costs for different types of buildings in various locations in Africa. therefore the building costs must be seen as being for the normal standards prevailing in each particular region. Exchange rates have been based on 1 November 2010. but exclude costs of site infrastructure development.
250 2. equipment & VAT.810 1.000 2.620 314.920 139.430 1.930 170.100 Resort style (including spa) 702.200 2.000 490 Heavy duty factory 1.360 1.500 697.060 910 1.440 4.250 2.640 505 1.54 460 ZAR 7.150 2.590 1.430 409.500 2.050 820 1.600 1.900 2.290 2.170 430 600 820 1. .300 80.050 Luxury unit high rise 2.320 337.28 KES MZN 35.130 4.160 1.590 700 GHS 1.480 1.000 1.52 750 NGN 149.900 135.490 1.210 1.500 1.560 540 1.040 93.000 260.700 840 730 1.430 133.320 2.500 5–Star luxury (including spa) 580.00 Building type Angola Luanda Botswana Gaborone Residential (rate/m2) Average multi–unit high rise 1.730 Major shopping centre (CBD) 2.000 200.000 330.470 404. professional fees.630 1.000 334.520 Other (rate/m2) Multi–storey car park 1.27 7.450 2.290 367.010 3.180 930 1.AFRICA BUILDING COST COMPARISON Ghana Accra Mozam– bique Maputo South Africa Johannes– burg | 52 Kenya Nairobi Nigeria Abuja Nigeria Lagos Rwanda Kigali Senegal Dakar Tanzania Dar Es Salaam 870 1.000 554.100 1.250 1.390 2.590 93. site works.390 690 Exchange rates (1 November 2010) AOA BWP USD = 1 92.000 390.800 1.850 2.00 Prices exclude land.410 1.550 1.190 376.45 77.260 573.200 1.900 72.000 358.350 780 1.900 1.130 Industrial (rate/m2) Light duty factory 1.300 90.650 650 1.52 810 RWF 595.390 1.300 Uganda Kampala Zambia Lusaka 900 1.250 1.650 1.790 4.170 520 1.200 850 1.000 83.330 1.620 343.000 1.640 Hotel (rate/key) 3–Star budget 145.740 1.530 1.00 670 UGX 2315.280 1.800 789.910 77.00 680 XOF 479.000 78.610 Individual prestige houses (Detached houses & bungalows) 4.450 1.400 405. Hotel rates include an allowance for FF&E.00 640 ZMK 4930.260 1.040 400 770 1.490 990 810 1.400 960 790 940 900 1.370 Prestige offices high rise 2.000 275.320 460 1.600 950 1.60 400 500 770 NGN 149.700 1.000 110.610 Commercial/Retail (rate/m2) Average standard offices high rise 1. tenant fitout.240 1.00 740 TZS 1481.550 780 2.400 445.560 296.500 385.150 2.100 552.120 1.
090 900 1.155 496 890 1.490 2.500 4.100 4.67 QAR HKD 7.67 3.475 440 790 770 1.066 N/A 935 420 400 445 1.395 2.200 1. professional fees.810 2.020 995 1.700 Resort style 2.500 1.330 1.600 2.325 Major shopping centre (CBD) 660 880 1.300 Other Multi-storey car park 645 330 660 District hospital 2.500 1.400 1.100 Commercial/ Retail 1.165 1.920 5–Star luxury 3.290 2.060 1.125# 915 1.INTERNATIONAL BUILDING COST RATE COMPARISON (USD/m²) : 2nd QUARTER 2010 Abu Dhabi 1.300 3.250 4.900 4.060* 645 N/A 930 3.105 1.430 1.130 3.070 3.050 1.19 1.200 1.855 Average multi– unit high rise 2.310 1.200 655 2.930 760 1.400 1.000 4.200 Prestige offices high rise 2.420 2.330 3.410 800 3.800 Doha.420 2.100 4.360 1.325 Luxury unit high rise 2.78 2.780 1.198 1.250 3.820 1.130 1.440 1.000 3.00 USD 1.200 4.370 1.055 2.400 3.700 N/A 900 6.565 1.000 2.60 USD 1.210 735 1.000 4.860 3.600 768 1.020 915 1.400 1.090 2.550 1.270 270 940 275 990 1.495 1. Qatar Hong Kong Beijing Singapore Kuala Lumpur Manila Bangkok Jo’burg Los Angeles San Francisco New York London Building Type Sydney Auckland Bahrain Residential 2.40 MYR 3.000 3.210 435 1.800 2.450 3.660 2.970 2.160 2.900 2.450 1.445 1.600 880 6.070 2.900 2.600 4. site works. tenant fitout and equipment.700 4.46 0.550 3.800 2.110 325 N/A N/A 410 460 1.310 1.380 1.000 1.195 870 890 870 2.665 3.200 2.050 655 2.380 1.600 4.275 1.060 1.560 N/A N/A 3.800 3.465 Industrial 560 910 1.005 2.50 THB 32.630 AUD NZD BHD CHY 6.082 1.865 1.00 USD 1.460 2.900 3.500 Primary & secondary schools AED 3.67 Exchange rates (July 2010) USD = 1 1. .200 3.00 GBP 0.680 970 1.900 2.450 3.270* 1. * Rate includes FF&E.700 4.23 PHP 46.835 715 785 700 1.130 1.330 Light duty factory 530 415 660 Heavy duty factory 610 520 740 Hotel 3–Star budget 2.78 SGD 1. Prices exclude land.670 480 1.42 RAR 7.150 400 1.040 1.650 1.100 1.910 3.810 3.650 Individual prestige houses 2. ^ Rate includes raised flooring and ceiling to tenanted areas.500 3.900 2.900 3.38 53 | Note: Large fluctuations in exchange rates can create short–term anomalies.650 3.163 N/A 1.060* 2.425 2.200 2.200 3.255 3.500 850 6.230 700 1.660 1. # Rate includes parking and minimal external works.800 3.140 1.800 2.240 1.200 1.890 990 530 655 870 395 3.790 Average standard offices high rise 2.050 N/A 583 2.730 1.500 1.050^ 1.
130 Bangalore 175 Mumbai 900 Jakarta 260 Dublin 500 Nairobi 140 Seoul 650 Beirut 380 Kuala Lumpur 265 Maputo 350 Auckland 500 Christchurch 400 .INTERNATIONAL PRESTIGIOUS OFFICE RENTAL COMPARISON Country Australia Australia Australia Australia Australia Bahrain Botswana China China China China Egypt England England England England England England England England France India India Indonesia Ireland Kenya Korea Lebanon Malaysia Mozambique New Zealand New Zealand | 54 City USD/m² per annum Adelaide 450 Brisbane 750 Melbourne 600 Perth 800 Sydney 900 Manama 400 Gaborone 225 Beijing 580 Hong Kong 890 Shanghai 600 Shenzhen 365 Cairo 330 Birmingham 460 Cambridge 410 Leeds 430 Liverpool 330 London (City) 835 London (West End) 1.275 Manchester 470 Oxford 335 Paris 1.
Above are gross rentals and include operating costs and municipal costs. but include GST where applicable. 55 | . but exclude electricity/water consumption.New Zealand Nigeria Nigeria Philippines Qatar Russia Russia Rwanda Scotland Scotland Singapore South Africa South Africa South Africa South Africa South Africa Spain Tanzania Thailand Uganda United Arab Emirates USA USA USA USA USA USA Zambia Wellington Abuja Lagos Manila Doha Moscow St Petersburg Kigali Edinburgh Glasgow Singapore Cape Town Durban Johannesburg Port Elizabeth Pretoria Barcelona Dar Es Salaam Bangkok Kampala Dubai Los Angeles New York (Manhattan) Philadelphia Sacramento San Francisco Seattle Lusaka 500 650 800 230 640 1.200 850 330 460 470 845 280 270 360 220 280 360 255 300 200 945 325 500 265 325 390 290 250 Note: Rates are applicable as at 1 January 2011 and exclude VAT.
| 56 05 | SECTION FIVE BUILDING COST .
escalation. may refer to building cost as the cost of labour. for example. building cost shall be deemed to mean the tender price (or negotiated price) submitted by the building contractor. which is then quoted as the average annual increase for that particular year. material. The year–on–year rate should be used in escalation calculations. The year–on–year rate compares the January (or December) index with the index for the corresponding month of the previous year and reflects the increase over that year. etc. The average rate is of no real use in calculating escalation and is of general interest only. which could include professional fees. plant. loss of interest.BUILDING COST The meaning of the words ‘building cost’ depends on the application thereof in context. fuel and supervision. The average rate compares the indices for each month (or quarter) of the year with those of the corresponding months (or quarters) of the preceding year and calculates the average of these. plan approval fees. 57 | . taking cognisance of actual project programmes. a developer may refer to building cost as either the tender price from the contractor or the ultimate cost of the project. In contrast. A building contractor. namely the average rate and the year–on–year rate. For the purposes of this document. ESCALATION RATE There seem to be two popular methods of calculating and expressing percentage annual increases.
in 2008 the year–on–year rate (January 2008 to January 2009) of building cost inflation in South Africa is only 6. a factor must be introduced to take account of the cash flow of payments during the construction period — usually 0. Provision should therefore be made for the changes in tender prices during the period from the date of the estimate to the expected tender date. It is calculated by multiplying the estimated current building cost by the average estimated monthly percentage increase and by the number of months from the date of the estimate to the tender date. When the said increase is added to the estimated current building cost. the total will equal the anticipated tender amount. for various reasons.3% but the average annual rate (comparing monthly indices) is 14. For example. Furthermore.4%. The Joint Building Contracts Committee — Series 2000 Contract Price Adjustment Provisions (JBCC CPAP) formula provides for 85% of the contract amount to be subject to escalation adjustment — with the remaining 15% to stay fixed. Contract price adjustment Provision is made for the escalation in building cost during the contract period.There could be a significant difference in the two rates in question. | 58 . change on an ongoing basis.6 is acceptable if a short method of calculation is employed. CALCULATION OF ESTIMATED ESCALATION OF CONSTRUCTION CONTRACTS Pre-contract Construction costs.
are as follows: 59 | . University of Stellenbosch (BER) (January to January of each year) and for JBCC CPAP formula (work group 181 ‘Commercial/ industrial buildings’) published by Statistics South Africa (P0151). tender prices) based on the indices published by the Bureau for Economic Research.85 and 0.6 and then by the estimated monthly percentage increase indicated by the relevant indices incorporated in the JBCC CPAP formula and by the contract period expressed in months. TENDER PRICE ESCALATION The annual year–on–year increases in building costs (i.e.The total escalation during the contract period is therefore calculated by multiplying the anticipated tender amount by 0.
6 126.09 1.8 141.4 154.9 + 5.8% + 6.0 105.3% + 0.9 189.7% 4.3 171.9% + 11.1% Note: The average annual increases indicated by the BER in their publications are the average of the quarterly increases for that particular year and will not correspond to the above year–on–year increases.12 1. which incorporates the contractor’s mark–up. availability of materials.5 221.06 0.2 + 9.4% + 6.0 150.9 170. etc.99 1.COST INDICES APPLICABLE TO THE BUILDING INDUSTRY YEAR BER Index (Jan 2005=100) Year– on–year increase JBCC CPAP Index (Jan 2005=100 Year– on–year increase TMI 2005 2006 2007 2008 2009 2010 *2011 *2012 *2013 *2014 100.1 159.04 1.4% + 14.04 1.14 1.3 153. The difference between the tender price escalation and the escalation according to the indices incorporated in the JBCC CPAP formula for any one period may be attributed to the market factor. Stellenbosch.4% 1.5% + 11.16 + 5.5 117.4% + 11.4% – 2.1% + 11.5% + + + 7. * Forecast based on information provided by Medium–Term Forecasting Associates Building Economists.6 121. | 60 .5% 100.9 144.8% 2.3 145.2% + 18.6% + 11.1 151.0 109. productivity.9 191.4% + 15.08 1.
indicating an unfavourable tender market from the viewpoint of the employer and it would be prudent to recommend negotiation as opposed to tendering.e. Conversely. gives an indication of the tender climate. The building cost index. this indicates a favourable tender market. i. When the two lines diverge. JBCC CPAP is ‘dropping’ and BER is ‘rising. which is based on the cost of labour and material. When the TMI (see graph on page 66) shows a downward gradient. 61 | . giving an indication of competitiveness of tendering. i. the increase in BER is greater than the increase in JBCC CPAP indices. When the two lines (JBCC CPAP and BER) converge.TENDER CLIMATE The column marked ‘TMI’ (tender market indicator). therefore.’ then rather negotiate. as published by the BER and which is based on tender prices. i. the next point is numerically less than the previous.e. if the graph has an upward gradient. It represents a comparison or rate of change of BER and JBCC CPAP indices. JBCC CPAP is ‘rising’ and BER is ‘dropping.e. which results from the calculation of BER ÷ JBCC CPAP and indicates that the increase in BER (tender index) is less than the increase in the JBCC CPAP index. The result is the movement of tender prices excluding the influence of market costs of labour and material.’ then proceed to tender instead. has been deflated by the index for JBCC CPAP work group 181. a favourable tender market from the viewpoint of the employer exists. This tendency is also apparent on the cost indices graph (see page 65).
Selected contractors at this level have little competition. VALUE ADDED TAX As the majority of developers are registered vendors in the property industry.e. causing severe pressure on budgets. This will vary according to the payment period of the individual vendor but in all cases will add to the capital cost of the project to the extent of interest on the VAT outstanding for the VAT cycle of the particular vendor. It was apparently experienced throughout that the unit costs of these projects were significantly higher than originally anticipated. a factor has been introduced resulting in an equal base to both BER and JBCC CPAP indices (i. many new construction works and associated infrastructure projects were under construction.Base dates: To allow for comparison of indices. | 62 . any value added tax (VAT) paid by them on commercial property development is fully recoverable. in anticipation of the 2010 FIFA World Cup South Africa™. however. after VAT inclusion) be required. Projects of such magnitude can only be constructed by major contractors possessing the required expertise and resources. of the effect of VAT on cash flow over a time period. For example. Therefore to reflect the net development cost. resulting in clients’ cost overruns. Should the gross cost (i. January 2005 = 100). UNIQUE LARGE SCALE PROJECTS Building cost estimation seems to become more complex when unique circumstances prevail. VAT should be excluded. and based on a favourable supply and demand market for them. priced costs accordingly. Cognisance should be taken.e. then VAT at the ruling rate (currently 14%) should be added.
06 | SECTION SIX GRAPHS: BER AND JBCC CPAP 63 | .
000’s) Bureau for Economic Research Joint Building Contracts Committee .Series 2000 Contract Price Adjustment Provisions (JBCC CPAP) | 64 .JANUARY TO JANUARY % Change 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 PERCENTAGE 3 2 1 0 05 06 07 08 09 10 11 12 13 YEAR (2.
Series 2000 Contract Price Adjustment Provisions (JBCC CPAP) 65 | .JANUARY INDICES 240 220 200 180 160 140 COST INDEX 120 100 05 06 07 08 09 10 11 12 13 14 YEAR (2.000’s) Bureau for Economic Research Joint Building Contracts Committee .
Refer to section 5.05 1. It is the result of the relationship between BER and JBCC CPAP.20 1.000’s) 09 10 11 12 13 Note: This graph gives an indication of the tender climate.TENDER MARKET INDICATOR BER deflated by JBCC CPAP 1.90 05 06 07 08 YEAR (2. | 66 . page 61.00 INDICATOR 0.95 0.15 1.10 1.
07 | SECTION SEVEN METHOD FOR MEASURING RENTABLE AREAS 67 | .
It should be noted. etc. The current. strip and value centres/warehouses – Industrial developments. mini–units and trading warehouses. many landlords and developers have derived methods for calculating the rentable areas in buildings. flats/ apartments. including factories. that the latest edition is approved for use from the 1st of August 2005 and that it should not be applied retrospectively. we have abbreviated and simplified for easier understanding the definitions contained in that document. together with our comments on the use of rentable areas as follows: The document separately provides methods for measuring floor areas of: – Offices of all types – Retail developments. multi–storey and the like – Residential buildings. most commonly used is the method recommended by SAPOA entitled ‘Method for Measuring Floor Areas in Buildings. townhouses. | 68 . however. It replaces the document ‘The SAPOA Method for Measuring Floor Areas in Commercial and Industrial Buildings’ (updated August 1991).In the past. First Edition’ (effective from 1st August 2005). including malls. Notwithstanding or detracting from the above publication. and by kind permission of SAPOA. cluster houses. including houses. stand–alone. warehouses.
For ‘offices of all types’ referred to before. Unless otherwise indicated. Rentable area shall have a minimum floor–to–ceiling height of 1. is the measurement of useable area together with common area and supplementary area. 69 | . and all openings on other levels to form the atria. which comprises rentable area. It is also used by those analysing the economic potential of a building. Only the lowest levels of the atria are to be included. Its intended use is in determining the revenue–producing area of a building. this is the sum of the areas measured at each floor level over any external walls to the external finished surface. which is determined at each level of offices. adjusted by deducting major vertical penetrations. are to be excluded. the unit of measurement is given in square metres (m²). AREA DEFINITIONS Construction area The entire covered built area. Rentable area comprises useable area plus common area. No deduction shall be made for columns.5 meters. Rentable area The total area of the building enclosed by the dominant face. the following definitions and explanations are applicable: THE BASIS The basis used in calculating the rentable area. supplementary area and parking.
– Supplementary area Any additional revenue–producing component that falls outside of the definition of rentable area. Common area Common area is an area to which the tenant has access and/or use. and is part of rentable area. Primary common area of the building is apportioned to tenancies pro–rata to the useable area of that tenancy.Rentable area excludes supplementary area. Accordingly. adjusted by deducting all common area and major vertical penetrations. or any other portion of rentable area not located on the given floor. which may produce additional revenue. together with remote common area. The total area of the building enclosed by the dominant face. Secondary common area comprises areas beyond primary common area giving access to multiple tenancies. Common area has two components: – Primary common area comprises all rentable area on a given floor. Secondary common area is apportioned only to tenancies that it services. which comprises areas such as entrance foyers. this area may vary over the life of a multiple tenancy building. plant and service rooms. Supplementary | 70 . No deduction shall be made for columns. that is not useable area. Useable area Area capable of exclusive occupation by the tenant. Its intended use is to be the essential part of rentable area and the basis for the apportionment of common area.
terraces. lift shafts. Entrance foyer A portion of remote common area including associated adjacent rooms and lobby. and includes — for example — storerooms. transformer rooms.5m² in area shall be deducted from rentable area. access/service passages and signage/advertising areas and parking areas demarcated for the use of the tenant. and their enclosing walls. electrical sub–stations. GENERAL DEFINITIONS Atrium A weatherproof interior space. Lift lobby and entrance foyers that occur together with parking floors (not adjacent to office areas) shall be remote common area. Major vertical penetrations Stairs and landings. flues. central air–conditioning plantrooms and lift motor rooms shall be included in primary common area. exceeding 0. Voids in floors above atrium space shall not be included in rentable area. Remote service areas and plantrooms Remote refuse rooms. accessible and capable of use by the tenant at the lowest level. and the like. pipe shafts.area needs not be weatherproof. vertical ducts. balconies. patios. 71 | . Parking bays shall be given in number.
leisure and sport centres. RETAIL. law courts. Dedicated storage areas are separately listed as supplementary areas. it is suggested that the relevant sections of the said document be carefully studied. One must therefore understand the complete ‘SAPOA Method for Measuring Floor Areas in Buildings. The above method is designed to accommodate the measurement of most building types.’ and implement the various facets of the definitions to achieve higher efficiencies between the various areas. hospitals. petrol stations. | 72 . as far as is practical. INDUSTRIAL. retirement villages and others may only be able to utilise the underlying principles adopted within this method. certain building types such as hotels. First Edition. it becomes incumbent on the architects and designers to design more efficiently. GENERALLY Developers and financiers are constantly attempting to either reduce building costs or increase rental levels to achieve higher returns.Storage areas Dedicated storage areas within useable area shall be included as useable area. For detailed information. however. RESIDENTIAL AND OTHER DEVELOPMENTS Similar provisions have been made for measuring floor areas of retail. industrial and residential buildings referred to above. When these parameters are exhausted.
We are thankful to SAPOA for their permission to use extracts from this publication.The initial return is more sensitive to an increase in rental income (which can be affected by increasing the rental area) than the corresponding percentage reduction in construction costs. and should not be used in preference to the SAPOA publication. the above has been produced as a quick guideline only. which is far more comprehensive and detailed. Once again. 73 | .
| 74 08 | SECTION EIGHT RETURN ON INVESTMENT .
’ The major advantage of employing the initial return method is that expenses and income do not have to be escalated too far into the future and these are therefore relatively accurate and easily understood in today’s money terms. The fact that the first year of operation may have a higher vacancy factor than subsequent years should be ignored when the initial return is calculated in order to reflect long-term potential more accurately. The initial return should be qualified as follows: – – All expenses and income have been escalated to the construction completion date Interim income received prior to the construction completion date has been deducted from the capital investment after adjusting for operating expenses and cost of capital The returns are expressed as percentages of the 75 | – . THE INITIAL RETURN The initial return is based on the net income during the first year of operation of the development.CRITERIA TO BE EMPLOYED There are two distinct criteria generally used for evaluating the financial viability of a property investment. The return is expressed as a percentage per annum of the anticipated capital investment. namely: – – The initial return and The cash flow analysis. Escalation in construction cost and cost of capital are both taken into account in an effort to incorporate the ‘time value of money.
the income and expenditure cash flow over the economic lifespan of the investment is taken into account. The IRR of an investment is generally used by institutional investors. The IRR is the rate of interest that equates the present value of the expected future net income with the present value of the cost of the investment. The NPV would therefore be exactly zero if the IRR is used as the discount rate. loan repayments or interest charges on loans The calculated returns are for the first complete year of operation only and do not cater to the following: – When the project may not reach full maturity during the first year of operation – Vacancies – Recoupment of capital during the income-bearing period of the investment or realisation value of the investment at the end of the investment period – Income tax. CASH FLOW ANALYSIS OVER A PREDETERMINED PERIOD In the cash flow method. | 76 .– escalated capital investment and do not take into account loans. as it is a comparative indication of the profitability of alternative investment options. With a positive NPV the project can be accepted and it should be rejected if the NPV is negative. outflows and initial investment) and discount to present values at the project’s cost of capital. Usually an internal rate of return (IRR) and/or a net present value (NPV) is employed to evaluate the financial viability. The NPV (discounted cash flow) method works as follows: determine the sum of all cash flows (inflows.
It is of significance to notice by informal observation by the experienced analyst. that income has been taken into account at the beginning of each month and expenditure at the end of each month. The modified internal rate of return (MIRR) overcomes this problem by assuming that cash flows are reinvested at the cost of capital rate (or any other given rate).A weakness of the IRR calculation is the fact that an implicit assumption is made that cash flows are reinvested at the project’s own IRR. It is suggested that. etc. where applicable. As the cost of capital rate is normally determined at a lower rate than the IRR. that there is a close relationship between the initial return and the IRR — to be applied with care. The assumptions on which the cash flow return is based should be listed. These should inter alia include the assumed investment period (e. the terminal value. escalation in rental and operating expenses over the investment period.g. and may be calculated in addition. however. 20 years after the construction completion date). it can be assumed that the MIRR–calculation will always render a lower result. 77 | . a comprehensive financial viability analysis should incorporate both the initial return and the cash flow method of evaluation.
00% per annum Net cash flow Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 (+ terminal value) –100.319 27.441.212 45.000 10.805 14.000.190.445.50% 9.552 17.088.000 11.948 35.532.151 49.987.411 20.500.000 R 10.908 22.518 53.428.879 24.050 13.804.194. | 78 .246.00% annual escalation in rental is 19.821.609.857.134 38.000 10.000.066 41.764 614.607 16.688.597.551 19.475.980 32.443 560.000 12.921.155.529.440.EXAMPLE Total capital expenditure (investment) Rental in first year (net income) Initial return in first year Escalation in net rental income R 100.075 The IRR with 9.094.477 29.50%.500.
e. 19. Capital expenses are normally higher due to investment in ‘green’ technology and more expensive methods employed.846. the escalation rate is 9. the long–term effect on the operation and maintenance of buildings due to better energy efficiency and the like should be demonstrated to building owners and tenants in order to determine the viability in a scientific way.00% = R58. i. provided that the terminal value is calculated as in the given example. A rule of thumb for the calculation of the approximate IRR for an investment is that it is equal to the sum of the initial return plus the escalation rate (assumed to be constant over the investment period). i.313) capitalised at the initial yield. 79 | . cash flow analyses over longer time periods have become absolutely essential.50%.The terminal value is subjective and in this example has been assumed as the capitalised value of the anticipated rental in year 21 (i. assuming a capitalisation rate equal to the initial return. Note: Where Green Star SA ratings are a requirement. Thus. 10.e.987.00% and the approximate IRR is the sum of the two. Therefore.443 + 9. the IRR drops to 16. i.50%. the capitalised value of the anticipated rental in the year after disposal. R53.92%. in the given example.e.e.50%. the initial return is 10. Should the terminal value be assumed to be nil (this is unlikely as the land parcel will always have a value).
| 80 09 | SECTION NINE RESIDUAL LAND VALUE .
e. 81 | .The calculation of the residual land value for a predetermined rate of return.e. what a developer can afford to pay for a parcel of land given a specified return for a particular development. The formula is determined as follows: Return = net annual income total capital outlay (TCO) net annual income y+x = (where y = TCO excluding land value and its corresponding loss of interest and x = land value and its corresponding loss of interest) Therefore x = Now x = = net annual income return –y land value + loss of interest future value of land Therefore to obtain present land value. i. merely discount x at the interest rate and period used in the previous calculations of TCO. land value excluding its corresponding loss of interest. i.
365. and careful consideration should be given to this rate taking into account the risk profile of the proposed development.000 265.000 discounted at 10. land value is R12.000 45.a.000 5.000 The above residual value is very sensitive to changes of the required rate of return.5% p.635.000.000 R 47.204 ≈ R 11.00% p.000 R 38.087.000 and the following capital outlay? Estimated escalated building cost Professional fees Legal and plan approval fees Interim rates on ground during construction period Loss of interest and/or bond interest at 10.000 – R47. over 15 months = R11.10 R12. otherwise known as the capitalisation rate (CAP rate). compounded monthly over a 15-month construction period Total capital outlay excluding land cost (y) x = = = net annual income –y return 6.180.635.5% p.a.000 3.365.a.000.000.000 0.000 Therefore.EXAMPLE What price should be paid for land to obtain a return of 10. with a net annual income of R6. | 82 .725.150.
10 | SECTION TEN AFRICA IN FIGURES 83 | .
221 17 945 241 753 391 18.345 239 580 30 118 802 824 924 1.0 2.5 * 3.0 2.9 12.0 1.9 * * 11.0 39.1 18.2 5.1 151.0 1.0 2.3 0.0 14 3 28 103 68 66 152 28 3 166 40 68 48 161 17 32 Source: World Development Report 2010 * Figures not available | 84 HIV prevalence % of pop ages 15–49.2 2.8 2.AREA AND POPULATION Average annual % growth 2000– 2008 Angola Botswana DRC Ghana Kenya Lesotho Malawi Mozambique Namibia Nigeria South Africa Swaziland Tanzania Uganda Zambia Zimbabwe 1.0 14.0 12.9 1.3 .0 32.0 22.4 15.5 2.247 582 2.0 2.6 2. 2007 Pop density (per km²) 2008 Pop million 2008 Land area (000 km²) 2.2 15.0 49.1 * * 1.7 3.6 0.4 1.2 2.2 1.0 13.3 1.9 64.0 2.2 42.2 3.1 * 6.0 23.
Million 0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 Angola Botswana DRC Ghana POPULATION 2008 Kenya Lesotho Malawi Mozambique Namibia Nigeria South Africa Swaziland Tanzania Uganda Zambia Zimbabwe 85 | .
304 3.3 * 6.472 212.7 * 5.6 4.200 1.5 5.470 150 670 770 1.6 4.6 * 4.490 14.764 Source: World Development Report 2010 * Figures not available | 86 .260 3.533 622 1.520 440 420 950 * 28.340 83.766 9.220 4.123 34.529 14.2 8.080 * 4.8 7.507 * 4.886 8.735 * 13.0 * 6.080 290 370 4.3 –5.7 3.997 276.588 16.GROSS DOMESTIC PRODUCT (AT CONSTANT 2008 PRICES) Average annual growth rate 2000–2008 GNI Per capita USD 2008 USD (Millions) 1990 USD (Millions) 2008 Angola Botswana DRC Ghana Kenya Lesotho Malawi Mozambique Namibia Nigeria Swaziland Tanzania Uganda Zambia Zimbabwe 10.803 2.383 * 11.269 9.348 5.820 2.450 6.314 * South Africa 111.512 2.784 * 20.160 5.5 5.288 8.
GROSS DOMESTIC PRODUCT 2008 USD Millions GNI per capita USD 280000 260000 240000 220000 200000 180000 160000 140000 120000 100000 80000 60000 40000 20000 0 Angola Botswana DRC Ghana Kenya Lesotho Malawi Mozambique Namibia Nigeria South Africa Swaziland Tanzania Uganda Zambia Zimbabwe 7000 6500 6000 5500 5000 4500 4000 3500 3000 2500 2000 1500 1000 500 0 87 | .
| 88 11 | SECTION ELEVEN DIRECTORY OF OFFICES .
co.Johannesburg Tel: E–mail: Managing director: Senior executives: CORPORATE +27 (0) 11 666 2000 email@example.com Indresen Pillay Andries Schoeman Rob Black Sam Kelbrick 89 | .
co.za Alastair Reid Craig Stuart Gerhard Brümmer Indresen Pillay Kevin Pickup Neels Heunis Pusetso Makote Sean Forbes Durban Tel: E–mail: Executives: George Tel: E–mail: Executive: Johannesburg Tel: E–mail: Executives: | 90 .za Alan van Rensburg Martin Meinesz Nigel Sessions Tim Smith +27 (0) 31 275 4200 firstname.lastname@example.org.QUANTITY SURVEYING/COST MANAGEMENT Cape Town Tel: E–mail: Executives: +27 (0) 21 423 7840 email@example.com Dean Chandler +27 (0) 11 666 2000 firstname.lastname@example.org Andries Schoeman Dean Narainsamy +27 (0) 44 873 5070 grg@davislangdon.
za Francois du Toit Ian Sutherland Sam Kelbrick Stellenbosch Tel: E–mail: Executives: 91 | .co.co.co.co.co.co.Klerksdorp Tel: E–mail: Executive: Nelspruit Tel: Associate: E–mail: Executive: Pietermaritzburg Tel: E–mail: Executive: Port Elizabeth Tel: E–mail: Executive: Pretoria Tel: E–mail: Executives: +27 (0) 18 468 5059 email@example.com@davislangdon.za Andries Cilliers Karl Röhrs Pieter Rossouw Tobie van Wyk +27 (0) 21 880 8300 firstname.lastname@example.org Dean Chandler +27 (0) 12 460 5100 email@example.com Noel Stevens +27 (0) 41 365 6221 firstname.lastname@example.org Bertus van Eeden +27 (0) 13 741 4882 Gary van Rensburg gary.za Indresen Pillay +27 (0) 33 345 8371 pmb@davislangdon.
za Craig Hall Ian Gildenhuys Rob Black +27 (0) 18 468 5059 email@example.com Bertus van Eeden +27 (0) 16 889 4159 firstname.lastname@example.org Tobie van Wyk Klerksdorp Tel: E–mail: Executive: Vanderbijlpark Tel: E–mail: Executive: | 92 .ENGINEERING Johannesburg Tel: E–mail: Executives: +27 (0) 11 666 2000 eng@davislangdon.
co.za BOTSWANA Davis Langdon (CCMI Botswana) Tel: +267 390 0711 E–mail: email@example.com Executive: Fred Selolwane MOZAMBIQUE Davis Langdon Mozambique Tel: +258 21 490 696/7 E–mail: firstname.lastname@example.org@davislangdon.co.za Greg Pearson email@example.com@tillyardnigeria. An AECOM Company Tel: +234 (1) 764 2726 E–mail: john.mz Executive: Charle Viljoen NIGERIA Tillyard Nigeria in association with Davis Langdon.com Executives: John Tuffrey Indresen Pillay Yemi Osisami 93 | .AFRICA REGION Tel: Executives: +27 (0) 11 666 2000 Andries Schoeman andries.
za Rob Fleming +27 (0) 31 275 4200 firstname.lastname@example.org Sam Kelbrick +27 (0) 11 666 2000 email@example.com Ian Gildenhuys Otto la Grange +27 (0) 12 460 5100 firstname.lastname@example.org Tobie van Wyk Stellenbosch Tel: E–mail: Executive: Johannesburg Tel: E–mail: Executives: Pretoria Tel: E–mail: Executive: | 94 .co.co.co.za Martin Donnelly KwaZulu-Natal Tel: E–mail: Executive: BUILDING SERVICES Durban Tel: E–mail: Executive: +27 (0) 31 275 4200 email@example.com.PROJECT MANAGEMENT Gauteng Tel: E–mail: Executive: +27 (0) 11 666 2000 firstname.lastname@example.org Andries Schoeman +27 (0) 21 880 8300 stb@davislangdon.
Gerhard Brümmer. Executive Research assistant Corrie Pienaar Design and layout Jme Creative | 3 . The producing mill is certified according to ISO 14001 and report their work according to EMAS.Printed on Munken Lynx. Munken is an environmentally friendly and ecologically sound uncoated wood free paper. Written and revised by Dr. It is FSC™ (The mark of responsible forestry) and PEFC (Promoting sustainable Forestry) certified.
aecom.com www.davislangdon.www.com | 4 .
SPECIFICATION CONSULTANCY DAVIS LANGDON SCHUMANN SMITH Johannesburg Tel: +27 (0) 11 666 2000 E–mail: email@example.com Manager: Shawn Kennard 95 | .
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